Tulsyan NEC Ltd Management Discussions

This Management Discussion and Analysis Report is operating and financial review of the company and is intended to convey the Managements perspective on the financial and operating performance of the Company at the end of the Financial Year 2024-25. This Report is to be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Integrated Report. The Companys financial statements have been prepared in accordance with the Indian Accounting Standards (‘Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (‘SEBI) from time to time.

I. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company operates across three key divisions — Steel, Power, and Synthetic Division.

In the Steel Division, the Company manufactures TMT Bars, Sponge Iron, Billets, and Ingots. TMT Bars are primarily used in the construction sector.

The Power Division operates under an Independent Power Producer (IPP) model, supplying thermal power through power exchanges and third-party agreements.

The Synthetic Division produces PP Woven Sacks, FIBC (Flexible Intermediate Bulk Containers), and Woven Fabric, catering to the packaging needs of industries such as cement, fertilizers, food grains, sugar, among others.

Raw Materials

Steel manufacturing relies on M.S. Scrap and Sponge Iron, while Billets serve as the raw material for producing TMT Bars. Power generation is primarily fueled by Coal, Dolochar, and other biofuels.

The synthetic packaging products are produced using PP Granules, which are abundantly available domestically and can also be freely imported. Being engaged in commodity-driven markets, the Company consistently undertakes initiatives to optimize costs and enhance operational efficiencies to sustain its profitability margins.

STEEL INDUSTRY

During the Financial Year 2024–25, the Indian steel industry continued to demonstrate resilience and strategic growth, reaffirming its position as the second-largest producer of crude steel globally. The sector benefited from robust demand driven by government-led infrastructure initiatives, increased activity in the construction and real estate sectors, and sustained investments in transportation and renewable energy projects.

The Government of Indias focus on infrastructure development under programs such as the National Infrastructure Pipeline (NIP) and PM Gati Shakti, along with continued capital expenditure allocations in the Union Budget 2024–25, provided a strong impetus to domestic steel consumption. Additionally, the Make in India initiative and the Production Linked Incentive (PLI) Scheme for specialty steel further encouraged capacity expansion and value-added production across the sector.

However, the industry also faced multiple challenges during the year. These included:

- Fluctuating prices of key raw materials such as iron ore, coal, and ferroalloys, which led to margin pressure.

- Global price volatility due to geopolitical tensions and supply chain disruptions.

- Increased competition from imported steel, especially from countries offering lower-cost products.

Despite these challenges, Indian steel makers continued to invest in technology upgradation, capacity enhancement, and sustainability initiatives such as adoption of green energy and carbon footprint reduction. The increasing shift toward electric arc furnaces (EAFs) and energy-efficient technologies also signaled the industrys gradual transition toward cleaner production processes in coming future. The long-term outlook for the Indian steel industry remains positive, backed by strong domestic demand fundamentals, government policy support, and increased focus on self-reliance in steel production. The company has also undertaken upgrades to align itself with industry standards, ensuring it progresses in step with evolving industrial practices.

Global Scenario

• In 2024, the world crude steel production reached 1,884.6 million tonnes (MT) as per provisional data released by World Steel Association. World Steel Association in its Short-Range Outlook, October 2024 forecasts that steel demand will grow by 1.2% year-on- year in 2025 and reach 1,771.5 MT after contracting 0.9% y-o-y in 2024 to 1750.9 MT.

• India is the second largest producer of crude steel. China was worlds largest crude steel producer in 2024 (1,005.1MT) followed by India (149.4 MT), Japan (84.0 MT) and the USA (79.5 MT). (Source: World Steel Association and the data is provisional).

• Per capita finished steel consumption in 2023 was 221 kg for world and 635 kg for China as per provisional data released by World Steel Association. The same for India was 108 kg in 2024-25.

• The global steel industry in FY 2024–25 witnessed a mixed performance, shaped by a combination of macroeconomic uncertainty, regional disparities in demand, and an ongoing transition toward green steel and decarbonization initiatives.

Following are the major Steel Industries indicators under Global scenario:

I. Global Market Trends and Demand Dynamics

• Global steel demand remained subdued in several advanced economies due to high inflation, rising interest rates, and slower-than expected recovery in sectors such as real estate and manufacturing.

• In contrast, emerging economies, particularly in Asia and the Middle East, saw modest growth in demand driven by public infrastructure investment and industrial development.

• The global construction sector — a major consumer of steel — remained under pressure, especially in China, where the real estate slowdown continued to impact steel consumption.

II. Global Production and Pricing

Global crude steel production remained largely flat or declined marginally, with capacity utilization under pressure in several regions. Steel prices experienced volatility throughout the year due to:

• Fluctuating input costs (iron ore, coking coal).

• Trade restrictions and protective tariffs.

• Geopolitical tensions, especially in Eastern Europe and the Middle East.

III. Global Sustainability and Green Steel Initiatives

• Sustainability became a central theme for global steel producers. Major players accelerated their shift toward low-carbon production technologies, such as hydrogen-based steelmaking, Electric Arc Furnaces (EAFs), and the use of renewable energy.

• Regulatory pressures from the European Unions Carbon Border Adjustment Mechanism (CBAM) and other climate frameworks prompted steelmakers to align with ESG goals and invest in carbon capture and utilization (CCU) technologies.

IV. Global Trade and Geopolitics

• The global steel trade landscape was marked by continued protectionist policies, with several countries imposing anti-dumping duties and revising import/export norms.

• Supply chain disruptions, lingering from the pandemic era and further aggravated by regional conflicts, affected the availability and cost of raw materials and finished steel.

Domestic Scenario

During 2024-25, the following was the domestic industry scenario:

• India remained the 2nd largest producer of crude steel globally during FY 2024–25, driven by continued expansion in production capacity and strong infrastructure-led demand.

• Domestic consumption grew moderately, supported by sectors such as construction, railways, automotive, capital goods, and renewable energy.

• Government infrastructure push through initiatives like PM Gati Shakti, National Infrastructure Pipeline (NIP), and Smart Cities Mission contributed to sustained steel demand.

• Policy support included customs duty rationalization, continued anti-dumping measures, and incentives under the Production Linked Incentive (PLI) scheme for specialty steel.

• Input cost pressures remained a concern due to fluctuations in iron ore and coking coal prices, impacting margins, especially for secondary steel producers.

• Steel prices corrected during the latter half of the year in line with global market trends, leading to margin pressure despite steady volumes.

• Import pressure increased, particularly from countries with excess capacity, prompting calls for trade protection and stricter quality checks.

• Emphasis on green steel and decarbonization began gaining traction, with large integrated producers investing in cleaner technologies.

• Overall, the domestic steel industry in FY 2024–25 demonstrated resilience amid global headwinds, supported by strong policy backing and robust demand fundamentals.

Production

• Crude Steel production stood at 112.011 MT. SAIL, RINL, NSL, TSL Group, AM/NS, JSWL Group & JSPL together produced 63.754 MT with a share of 57% in total production which was up by 0.3% over the CPLY. The rest amounting to 48.255 MT came from the Other Producers. With 84% share in total Crude Steel production, the Private Sector produced 94.458 MT Crude Steel which was up by 6.1% over the Corresponding Period Last Year.

• Pig Iron production was at 6.332 MT, up by 13.2% over the CPLY. With a share of 27% in total Pig Iron production, SAIL, RINL, NSL, TSL Group, AM/NS, JSWL Group & JSPL together produced 1.710 MT which was down by 1.5% over the CPLY. The rest came from the Other Producers with a growth of 19.8% over the CPLY. The Private Sector produced 5.677 MT which was up by 11.5% over the last year.

• Finished Steel Production (non-alloy + alloy/stainless) in April-March 2024-25:

- Production of Finished Steel stood at 107.192 MT showing a growth of 4.4% over last year.

- Export of Finished Steel stood at 3.600 MT showing a decline of 24.6% over last year.

- Import of Finished Steel was at 7.424 MT, up by 22.7% over last year.

- India was a net importer of Finished Steel.

- Consumption of Finished Steel was 111.493 MT showing a growth of 11.4% over the last year.

• Data on production of Pig Iron, Sponge Iron and Total Finished Steel (alloy/stainless + non-alloy) are given below for last five years:

Graphical Representation of the Data:

Demand - Availability

1. Demand Trends: TMT (Thermo-Mechanically Treated) Bars continued to see strong domestic demand during FY 2024–25, primarily driven by:

• Government-led infrastructure development (roads, bridges, metro rail, railways).

• Affordable housing projects under PMAY.

• Real estate recovery and urban construction.

• Expansion in industrial and logistics parks.

• The construction sector, which accounts for ~60% of TMT consumption, witnessed steady growth, resulting in an estimated 8–10% rise in TMT demand over the previous year.

2. Availability and Production: Indias installed TMT bar production capacity remained adequate to meet the rising demand, but regional supply imbalances were observed:

• Eastern and Central India (Jharkhand, Chhattisgarh, Odisha) had sufficient supply due to proximity to integrated steel plants.

• Western and Southern India witnessed tightness in supply, especially from small and medium-scale re-rollers, due to:

- Rising input costs (sponge iron, billets).

- Logistics constraints during monsoon and festive periods.

- Lower capacity utilization by secondary producers.

• Overall availability was stable but under pressure during Q3 FY 2024–25 due to:

- High scrap prices and billet shortages.

- Temporary shutdowns in some induction and re-rolling units.

- Shifting production priorities of integrated mills toward long products with better margins.

3. Price Dynamics

• TMT bar prices remained volatile, averaging between Rs.51,000 – Rs.56,000/tonne in major markets during FY 2024–25.

• Prices softened during Q3 due to subdued global steel sentiments and oversupply of billets in some zones but firmed up in Q4 with improved demand.

4. Demand–Supply Gap

• Although no major nationwide shortage was reported, localized shortfalls occurred, especially in the southern and northeastern regions.

• Demand outpaced supply marginally in several infrastructure-driven states during peak construction months (Oct–Jan).

• Overall, the TMT market remained supply-constrained in some periods, particularly for specific sizes (8mm–12mm) and customized grades.

5. Strategic Outlook

• Integrated players focused on expanding long product capacity, including TMT bars, to meet rising demand.

• Small and medium mills were affected by high working capital costs, impacting production consistency.

• Governments continued focus on "Housing for All", Smart Cities, and urban renewal programs is expected to sustain robust demand in coming years.

Conclusion

The demand for TMT bars in FY 2024–25 remained strong, with supply largely meeting market needs, albeit with regional and seasonal tightness. Strategic investments and policy support are essential to bridge future demand-supply mismatches and ensure uninterrupted availability.

Imports

• Iron & steel are freely importable.

• Ferrous scrap imports declined sharply, falling by ~16% year-on-year to approximately 8.45 million tonnes in FY 2024–25, down from ~10 million Tones in FY 2023-24.

• Containerised shipments dropped by around 18%, while bulk scrap imports increased modestly by ~3%, rising to 0.77 million Tones in FY 2024-25.

• South India, particularly ports like Chennai and Visakhapatnam, saw a spike in bulk scrap arrivals — up from just 21,000 t in FY 24 to 150,000 t in FY 25, a more than six-fold increase.

• Domestic ferro-scrap generation increased to ~32 Mt (up ~7% YoY), reducing reliance on imported feedstock.

• In FY 2024–25, ferrous scrap imports fell to ~8.45 Mt ( 16%), even as domestic scrap output rose.

• Bulk import routes grew, particularly for South India, while containerised flows declined significantly.

• A combination of higher DRI/hot-metal output, increasing domestic scrap recycling, and trade disruptions reduced reliance on foreign scrap.

• Strategic shifts toward semi-finished imports (in the stainless steel segment) and evolving trade regulations are set to maintain downward pressure on scrap imports going forward.

Exports

• Export data specific to TMT bars remains limited, but aggregate records suggest ~100–150 export shipments during FY 2024–25, indicating minimal volume compared to domestic output.

• Primary export destinations included Maldives, Seychelles, Morocco, suggesting niche markets rather than large-scale industrial demand.

• During the year a ~45% year-on-year decline in TMT bar shipments compared to the prior year, despite a sequential uptick in Q3–Q4 FY 25.

• Reflects broader fall in long steel product exports, as exports of long and semi-finished steel dropped sharply by ~30% overall in FY 2024-25.

Opportunities for growth of Iron and Steel in Private Sector: The New Industrial Policy Regime

The New Industrial policy opened up the Indian iron and steel industry for private investment by:

a. removing it from the list of industries reserved for public sector; and

b. exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are now freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of a facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.

The Growth Profile

i. Steel: The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the country.

ii. Crude steel capacity was 154.23 mt in 2021-22 (provisional), and India, which was the 2nd largest producer of crude steel in the world in 2021, as per rankings released by the World Steel Association, has to its credit, the capability to produce a variety of grades and that too, of international quality standards.

iii. Pig Iron: India is also an important producer of pig iron. Post-liberalization, with setting up several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. The private sector accounted for 89% of total production of pig iron (5.76 mt) in the country in 2021-22 (provisional).

iv Sponge Iron: India, worlds largest producer of sponge iron, has a host of coal-based units located in the mineral-rich states of the country. Over the years, the coal-based route has emerged as a key contributor and accounted for 77% of total Sponge Iron production in the country during 2021-22 (provisional). Production of Sponge Iron making too has increased over the years and stood at 39.03 mt during 2021-22 (provisional).

Tulsyan NECs performance vis-a-vis Indian Steel Industry Performance

Annual	Industry Finished Steel Production (India)	Growth Year Previous Year	Tulsyan NEC TMT Production In MTs	Growth Year Previous Year
2018-19	101290		1,40,626
2019-20	102620	1.31%	1,32,227	(5.97%)
2020-21	96200	(6.26%)	82,565	(37.56%)
2021-22	113600	18.09%	1,03,049	24.81%
2022-23	125320	10.32%	1,37,632	33.56%
2023-24	138825	10.77%	1,39,851	1.6%
2024-25	146560	5.57%	1,29,667	(7.28%)

Since last year, the Company has performed adverse to the steel industry. In the year 2021-22, when the industry growth was 18.09% Tulsyan NEC achieved a growth of 24.81%. In the year 2022-23, when the industry growth was 10.32% Tulsyan NEC achieved a growth of 33.56%. In the Financial year 2023-24, the growth was limited to 1.6% due to continuous drop in selling prices. The growth rate of overall steel industry has declined to 5.57% which has affected the companys overall growth dropping by 7.28%. The company has also upgraded its machineries and equipments which lead increase in finance cost and operational loss during the year.

Outlook

While global steel demand is expected to recover gradually in the medium term, the path ahead remains dependent on macroeconomic stability, geopolitical developments, and the pace of decarbonization efforts. The long-term transformation of the steel industry is expected to be shaped by innovation, environmental regulations, and evolving consumption patterns.

POWER:

POWER INDUSTRY

Indias power sector, the sixth-largest globally, is continuously evolving to meet the pace of accelerated manufacturing, rapid urbanization, and expanding agricultural activities. Rising domestic energy demand has driven notable advancements in power generation, transmission, and distribution, with a dynamic shift towards renewable energy sources such as solar and wind.

Indias power industry is a dynamic sector with a diverse mix of energy sources, including both conventional and renewable options. While thermal power (primarily coal) remains a significant contributor, India is actively expanding its renewable energy capacity, particularly solar and wind, to meet its growing energy needs and sustainability goals. The country ranks sixth in terms of total energy production with 126.567 quadrillion British thermal units (BTU). With a rapidly growing economy, increasing urbanization, and rising energy demand, India has made substantial advancements in power generation, transmission, and distribution. The sector operates under a combination of central and state government policies, regulatory frameworks, and private sector involvement.

A comparative analysis of power generation in India

Indias power sector has undergone a dynamic transformation, with notable shifts in its energy mix, capacity, and sustainability initiatives. As of January 2025, the total installed power capacity stands at 466.26 GW. The breakdown is as follows: Wind power at 48.16 GW, solar power at 97.87 GW, biomass/co-generation at 10.73 GW, small hydro power at 5.10 GW, waste to energy at 0.62 GW, and large hydro at 46.97 GW. Despite efforts to reduce dependence on fossil fuels, coal remains the dominant source. However, renewable energy is expanding rapidly.

Thermal power plant load is estimated to improve by 63% in FY 24, fuelled by strong demand growth along with subdued capacity addition in the sector.

The Indian power sector presents an investment opportunity worth Rs. 40,00,000 crore (US$ 461.95 billion) over the next decade, driven by rising demand, infrastructure upgrades, and the transition to clean energy.

DEMAND AND SUPPLY:

In FY 2024–25, the peak demand met rose to 250.1 GW, registering a 4.2% increase over the previous year. Interestingly, this figure nearly matched the total peak demand including unmet demand of 250.2 GW, indicating that the gap between demand and supply significantly narrowed, with just 0.1 GW (118 MW) of demand unmet.

Indias electricity generation in FY 2024–25 touched a new high of 1,821 billion units (BU) marking a continuation of the upward trajectory since the pandemic slump. This represents a 5% year-on-year growth over the 1,734 BU generated in FY 2023–24. The pace of growth has started to moderate. FY 2023–24 recorded a 7% increase over the previous year, and the year before that a sharp 9% rise.

In FY 2024–25, Indias electricity generation rose across all sources. Thermal grew by 2.8% (1,326 BU to 1,363 BU), nuclear by 18.4% (48 BU to 57 BU), large hydro by 10.8% (134 BU to 149 BU), and renewables by 11.4% (226 BU to 252 BU).

Performance of Power Division

During the financial year 2024–25, Tulsyan NEC undertook a significant strategic shift in its Power Division — transitioning from a Captive Power Producer (CPP) model to that of an Independent Power Producer (IPP). This strategic realignment was aimed at enhancing operational flexibility and improving contribution to the companys overall profitability.

While the base year 2023–24 as demonstrated in following chart showed strong potential for power sales through the Indian Energy Exchange (IEX) platform, market dynamics during 2024–25 witnessed a sustained downward trend. As a result, it was not commercially viable to sell power on the IEX platform from July 2024 to February 2025, leading to temporary idling of the power plant during this period.

Despite this operational downtime, the Power Division reported a notable improvement in performance — contributing Rs. 2,097 lakhs to operating profit in FY 2024–25, compared to Rs. 1,408 lakhs in FY 2023–24. This improvement underscores the effectiveness of the strategic shift and the divisions resilience in navigating market challenges.

During the financial year 2024–25, coal prices continued to play a pivotal role in determining the cost structure and profitability of thermal power generation in India. While global coal prices moderated slightly from the peak levels witnessed in FY 2022–23, domestic coal prices remained under pressure due to factors such as increased logistics costs, higher demand from core industries, and periodic supply constraints.

The coal supply by Coal India Ltd. (CIL) and other domestic sources improved marginally; however, dependence on imported coal for blending purposes persisted, particularly for coastal power plants. This exposed power generators to international price volatility. The average landed cost of imported coal during H1 FY 2024–25 remained significantly higher than domestic supply, leading to higher variable costs for thermal power producers.

In addition, thermal power plants operating under independent models or participating in power exchanges (such as IEX) faced margin compression during periods of subdued electricity prices, especially in Q3 of FY 2024–25, making operations less economical.

The elevated coal prices and supply-side bottlenecks during FY 2024–25 adversely impacted the operational efficiency and profitability of thermal power generators, particularly those without long-term fuel linkages or tariff protection mechanisms. Strategic sourcing, blending optimization, and inventory planning became critical to maintain viability amidst cost pressures. The Coal prices in USD in the last 5 years is as follows:

Tulsyan NEC power project is dependent on the imported coal and as the costs remain very high with no possibility of increasing the selling prices, the production had to be cut down which affected the performance of the Power division.

II. OPPORTUNITIES AND THREATS

Growth of Renewable Energy Sector and its Impact on the Thermal Power plants

• India is projected to witness a significant boost in thermal power generation investments, expected to reach Rs. 2,30,000 crore by 2027–28, nearly doubling the amount from the previous three years. This surge is attributed to the growing energy demand and the need for stable base load capacity.

• According to Crisil Ratings, private sector involvement is anticipated to rise sharply, contributing around one-third of the total investments, up from a mere 7–8% in recent years. The government has laid out plans to add at least 80 gigawatts (GW) of thermal capacity by 2031–32, of which 60 GW has already been announced or is in various stages of execution, including 19 GW from private developers. These upcoming projects are largely brownfield expansions that generally present fewer execution challenges compared to greenfield developments.

• Despite the encouraging investment outlook, certain operational challenges remain a major concern is the timely delivery of key machinery components such as turbines and boilers, due to limited manufacturing capability and a large order backlog at core suppliers. However, risks tied to fuel availability, electricity offtake, and tariff stability are relatively low. Most of the private projects are expected to become operational post-2028–29, factoring in the extended construction timelines involved.

• India has been promoting development of Renewable Energy generation by offering various incentives and benefits. Such promotional activities have indeed given results and substantial amount of counties energy requirements are being met from solar and wind projects currently.

• Solar power projects generate power during the day while the power requirement is at its peak during the night. Wind power is generated only during the few months of the year and most of the time generation is uneven and especially during the months where hydel power projects produce power.

• Thermal power remains vital in Indias energy landscape, especially in meeting peak summer demand, contributing 54 per cent of the total installed capacity of 446 GW (as of June 2024). However, coal-based capacity addition has slowed down and its share in the generation mix has decreased due to a policy shift towards renewables and rising stressed assets in the thermal sector. As India pursues its net-zero targets and aims for 500 GW of non-fossil capacity by 2030, the role of coal is shifting from baseload to balancing renewable energy. To support this, thermal plants must be retrofitted for flexible, efficient operation during peak demand.

• With central and state public sector undertakings contributing the majority of funding, the sector is poised for a robust expansion. The renewed investor interest, particularly from private entities, signals a strategic pivot in Indias energy landscape, balancing renewable ambitions with reliable thermal infrastructure for long-term energy security.

Power Capacity Additions by Energy Source (MW)

In view of this Central Government is now promoting Thermal Power projects and further investment therein.

Threats:

• Government intervention in the pricing at Energy Exchanges: The government has imposed a cap of Rs.10 Per unit for sale of power through Exchanges which is unwarranted and is a retrograde measure in the sustainability of the sector.

• Tendency of the Discoms to increase in transmission costs and related costs by avoiding increase in energy tariffs.

• Volatility in International Coal prices.

• Freebee culture adopted by some of the state government weaken the financial position of the Discoms and their ability to buy the power at the market prices to meet the demand.

To tackle these challenges, the thermal generation sector must strategically plan and execute by ensuring a stable coal supply chain, even during disruptions, by diversifying sources, improving logistics and maintaining higher stockpiles. The sector should learn from past mistakes by adopting prudent investment strategies and optimising existing assets. To meet stricter environmental regulations, thermal plants must upgrade to ultra-supercritical units, install SOx and NOx reduction equipment and explore carbon capture solutions.

Record renewables capacity in FY 24-25 signals Indias path beyond coal Indias power sector stands at a critical juncture, marked by record-high installed capacity and a rapidly evolving energy mix. With a total installed power capacity of over 475 GW, the country continues to rely heavily on coal, yet the momentum behind renewable energy has never been stronger. Recent years have seen unprecedented growth in solar and wind installations, alongside steady contributions from large hydro and other sources. At the same time, the sector faces important questions about the future role of coal, the pace of capacity additions, and the reliability of supply as electricity demand continues to rise. India has 32.3 GW of thermal capacity under construction and 23.55 GW of stressed capacity. This new report from the Centre for Research on Energy and Clean Air (CREA) finds that if all these plants are commissioned, total coal capacity would rise from 215 GW to 271 GW, which is higher than projected installed capacity requirements, indicating that existing and under-construction capacity is sufficient to meet future demand.

In FY 2024-25, the 230 GW peak demand met was crossed only on 60 days, compared to none in FY 2023-24. The number of days with demand below 200 GW dropped from 116 to 37. Despite this rise, overall demand remains within the operational range of the existing generation fleet.

In FY 2023-24, 305 out of 366 days saw their daily peak during solar hours. In FY 2024-25, this number was 256 out of 365. Peak demand during non-solar hours remained significantly lower, rising from 210.64 GW to 224.18 GW. These levels are well within the capacity of the existing and under-construction thermal, hydro, and other dispatchable sources.

On 30 May 2024, India recorded its highest-ever electricity demand at 250 GW, during solar hours with 0.1 GW shortage. Only 188.24 GW of thermal capacity was online, with the remainder offline due to maintenance or forced outages. This demonstrates that even peak loads can be met without utilising the full coal fleet, largely due to strong solar generation, which can contribute over 60 GW during daylight hours. India currently has 234 GW of renewable energy capacity in the pipeline, which will further reduce pressure on thermal resources as solar continues to dominate during peak hours.

A recent study shows that India can meet its projected electricity demand by 2030 without adding any new coal capacity, if it achieves a 600 GW non-fossil target (377 GW solar, 148 GW wind, 62 GW hydro, 20 GW nuclear). Even under faster-than-expected demand growth, this high-renewables pathway remains the most cost-effective. It would reduce power procurement costs while eliminating the need for new coal plants.

However, realizing this scenario hinges on complementary investments: energy storage, transmission upgrades, and enhanced grid coordination. Another study finds that if battery storage costs decline by 15% annually, India can cap coal capacity at 260 GW by 2030, as planned in the National Electricity Plan, avoiding new coal entirely. Even with slower (7%) storage cost declines, coal use would plateau, and only limited additional capacity may be needed to manage non-solar peaks. Renewables, even with integration and balancing costs, have already become cheaper than coal-based generation, reducing reliance on costly thermal plants.

III. SEGMENT-WISE/ PRODUCT-WISE PERFORMANCE

The production of steel rods was 129667 MT compared to 139851 MT in the previous year which showed a drop by 7.28%.

The production of power was 1643.70 Lac units compared to 1763.36 Lac units in the previous year registering a decline of 6.78% mainly due to shift from Captive Power Plant to Independent Power Plant.

The production of synthetic products was 2372 MT compared to 2634 MT in the previous year a decline of about 10% over previous year. The reduction in the production was on account of low demand for the products during the period.

Going forward, coal-based power generation plants must focus on four key considerations to remain competitive and sustainable.

I. First, preparing for flexible operation is essential as the increased penetration of renewable energy will require thermal plants to operate more flexibly. This will necessitate additional capital and operational expenditures, along with changes in control systems.

II. Second, there must be a focus on adopting more efficient and sustainable technologies. Future capacity additions will likely involve high-efficiency ultra-supercritical and advanced ultra-supercritical units, along with investments in SOx and NOx reduction equipment and evaluations of cost-effective carbon capture and storage solutions.

III. Third, digitalisation will play a critical role, with data-driven decision-making powered by AI/ML for performance optimisation and predictive maintenance, IIoT initiatives for equipment performance monitoring and the use of analytics to enhance market participation. Investments in emerging technologies such as AR/VR, drones and robotics will also be important.

IV. Finally, achieving operational excellence will be crucial, with a focus on optimising heat rate, auxiliary power consumption and oil consumption, as well as maintaining adequate coal stock, which has recently averaged seven to ten days.

The outlook for thermal generation remains stable, supported by several positive developments. An improvement in the thermal PLF has been observed, alongside a reduction in outstanding dues from state discoms, driven by the implementation of the late payment surcharge rules. Additionally, sustained growth in electricity demand is expected to enhance the prospects for signing new power purchase agreements for thermal independent power producers, providing greater visibility and stability for the sector in the coming years.

V. RISK AND CONCERNS

The thermal generation sector faces major challenges, particularly in maintaining a stable coal supply. Seasonal rainfall disrupts coal production and transportation, leading to critically low stocks, risking plant availability and potential blackouts. The sectors heavy reliance on coal makes any supply disruption impactful. Another challenge is the issue of stranded or stressed assets, where significant investments in TPPs remain underutilised, creating financial burdens. Tighter environmental regulations are also on the horizon, which, while necessary, may increase operational costs and complicate long-term planning. Additionally, the growing presence of renewable energy requires TPPs to operate more flexibly, straining equipment and increasing maintenance costs.

The persistent practice of providing free or highly subsidized electricity by various state governments. While politically motivated, this approach undermines the financial stability of distribution companies (DISCOMs) and risks broader market disruption.

Key implications include:

• Financial Strain on DISCOMs: Reduced revenue collection hampers the ability of DISCOMs to maintain infrastructure, invest in modernization, and meet operational costs.

• State Government Fiscal Stress: Continued free electricity policies can strain state budgets, limiting resources available for development and other essential services.

• Market Disruption: Unsustainable subsidies can lead to sectoral inefficiencies, increased debt, and potential disruptions in electricity supply.

• Policy Non-Compliance: Deviations from established electricity reforms and policies threaten sectoral reforms objectives, risking long-term sustainability.

Addressing this issue requires:

• Strong political will to align policies with sector reform goals.

• Implementation of targeted subsidy schemes rather than widespread free supply.

• Regulatory measures to ensure adherence to reform frameworks.

• Public awareness campaigns to understand the importance of sustainable power policies.

Ultimately, a balanced approach that considers social equity while ensuring financial viability is essential for the power sectors stability and growth. The company is conscious of the risks involved and has put in place a mechanism for minimizing and mitigating the same. The process is reviewed periodically.

VI. INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY

The company has proper and adequate system of internal controls commensurate with internal control system encompasses policies, procedures, and measures designed to safeguard assets, ensure the accuracy and reliability of financial reporting, promote operational efficiency, and ensure compliance with laws and regulations. In a power and steel company, which operates in complex, capital-intensive, and regulated environments, a robust internal control system is vital.

Key Components of Internal Control Systems :

1. Control Environment	- Establishing a strong organizational culture emphasizing integrity, ethical behavior, and accountability.
	- Clear organizational structure with defined authority and responsibility.
2. Risk Assessment	- Identifying risks related to operational, financial, regulatory, and environmental factors.
	- Implementing measures to mitigate identified risks.
3. Control Activities	- Segregation of duties to prevent fraud and errors.
	- Authorization and approval processes for transactions.
	- Physical controls over assets like machinery, raw materials, and finished goods.
	- Regular reconciliations and verification procedures.
4. Information and	- Reliable information systems for financial reporting and operational data.
Communication	- Effective communication channels across departments and levels of management.
5. Monitoring	- Ongoing internal and external audits.
	- Periodic review of control procedures and corrective measures.

The internal control system in the company is comprehensive, dynamically updated, and effectively implemented to deal with sector-specific risks. Its adequacy significantly impacts operational efficiency, financial integrity, regulatory compliance, and overall organizational resilience. Continuous review and strengthening of controls are essential to adapt to evolving challenges and ensure sustainable growth.

VII. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, the Company has achieved a Sales Turnover of Rs. 79,742.68 Lakhs which was reduced by 16.60 % over last years turnover of Rs. 95,599.52 Lakhs. The Comparative performance of major financial parameters during the financial years 2024-25 and 2023-24 is given below:

Amount

(Rs. in Lacs)

Particulars	2024-25	2023-24
Sales Turnover	79743	95600
Other Income	340	1753
Total Income	80083	97353
Profit before Interest, Depreciation, exceptional/abnormal items and Tax (EBIDTA)	1380	1555
Less: Interest	6415	3895
Less: Depreciation	2235	2488
Profit before Tax (PBT) before exceptional / abnormal items	(7270)	(4828)
Less: Exceptional items	0	0
Profit before Tax & OCI	(4828)	(4828)
Profit After Tax	(7270)	(5017)
Net worth	29477	36737
EBIDTA to Net sales (%)	1.73%	1.6%
PAT to Net worth	(25%)	(14%)
Debtors	9475	10363
Debtors Turnover (In days)	43	40
Inventory	6995	7903
Inventory Turnover (In days)	32	30
EBIT	(5035)	(2340)
Interest Coverage Ratio	0.22	0.40
Current Assets	18385	19977
Current Liabilities	28504	22767
Current Ratio	0.65	0.88
Debt	24783	23865
Debt Equity Ratio	0.91	0.65
Operating Profit Margin (%)	(9.12%)	(5.05%)

VIII. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Your Company believes that Human Resources are the driver to its continued success by helping to meet the challenges of providing quality products to the customers across the length and breadth of the country and penetrating key markets abroad. In order to strengthen its human capital base, your Company continues to invest in human resources by retaining and developing its existing talent and also attracting competent and talented manpower across functions.

Your Company maintained cordial and harmonious Industrial relations in all our manufacturing units. Several HR and industrial relations initiatives implemented by the Company have significantly helped in improving the work culture, enhancing productivity and enriching the quality of life of the workforce. All the above initiatives have contributed significantly to achieving and maintaining the market leadership, your Company enjoy today. The total employee strength as on 31st March, 2025 is 464.

IX. CAUTIONARY STATEMENT

The above Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be "forward looking Statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include external economic conditions affecting demand/supply influencing price conditions in the market in which the Company operates, changes in Government regulations, statutes, tax laws and other incidental factors.

By Order of the Board of Directors	Sd/-
For Tulsyan NEC Limited	Lalit Kumar Tulsyan
Place: Chennai	Executive Chairman
Date: 13-08-2025	DIN: 00632823